Spotify keeps big lead over Apple Music but disappoints with 108M subscribers

Apple Music lags with 60 million.

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Joan E. Solsman
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Spotify is the world's biggest susbscription music service. 

Angela Lang/CNET

Spotify's subscribers rose 31% year over year to hit 108 million subscribers at the end of June, the music-streaming service said Wednesday in its second-quarter report. That figure was weaker than Spotify expected but keeps it well above its closest competitor, Apple Music, which had 60 million subscribers as of June. 

Spotify also said Wednesday that 232 million people now use its service at least once a month, up 29% from a year earlier. Spotify, unlike Apple, has a free tier that lets anyone listen to music with advertising. Apple has never disclosed a monthly-active-user stat; almost all people who use Apple Music are subscribers. 

Spotify shares slumped 5.7% to $146.29 in early trading. Its earnings loss was wider than expected, and subscriber growth wasn't quite as strong as Spotify had predicted in April.

In the midst of a cultural shift to streaming music, Spotify and Apple Music have emerged as the leaders in a race to dominate subscription music. Though Spotify remains the biggest streaming service by both listeners and subscribers, Apple has reportedly overtaken Spotify in the race for subscribers in the US, which is the world's biggest market for recorded music. Apple Music has benefited from the popularity of the iPhone to recruit new members, but Spotify has risen from a small Swedish startup to dominate the most common way people listen to tunes.

Watch this: Apple Music vs. Spotify: Music streaming battle

Spotify's growth in monthly active users beat the best-case prediction the company made in April, coming in 4 million above the 228 million high end of guidance. But its subscribers -- who make Spotify way more money than ad-supported free listeners -- were at the low end of its expectations. Its 108 million figure scraped into its guidance range of 107 million to 110 million.  

Its subscriber growth was relatively weaker because fewer people signed up for its heavily discounted student plan. Spotify also said it would make up for the latest quarter's shortfall by the end of the year. 

(Apple's figure includes people on three-month free trials; Spotify offers a shorter, 30-day free trial, and it counts free subscribers during that promotional period if they have entered credit card details, which is the norm.)

Looking ahead, Spotify predicted that it will have 110 million to 114 million paid subscribers by the end of September and that its monthly active users will increase to between 240 million and 245 million. 

By the end of the year, it expects to cross the milestone of a quarter of a billion monthly listeners. 

In the latest quarter, Sweden-based Spotify reported a loss of 76 million euros ($85 million), or 0.42 euros a share, narrowing from a loss of 394 million euros, or 2.20 euros a share, a year earlier. Revenue climbed 31 percent to 1.67 billion euros.

Analysts on average expected a loss of 0.32 euros and revenue of 1.64 billion euros, according to Thomson Reuters. 

Originally published July 31, 3:06 a.m. PT.
Update, 6:32 a.m.: Adds share price decline.

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